Time of Supply of Goods – Under Forward charge - GST Ready Reckoner - GST

Time of Supply of Goods Under Forward charge Time limit for issuance of invoice for supply of goods under section 31 of CGST Act 2017. A registered person supplying taxable goods shall, before or at the time of, - Removal of goods for supply to the recipient, where the supply involves movement of goods ; or Delivery of goods or making available thereof to the recipient, in any other case (in other words movement of goods not involve ) , [section 31(1)] Example - ABC placed order to supply of mobile phone to ZYX, who agrees to supply within 10 days from the date of order. It is a case of supply involving movement of goods. VPL a manufacturer asks hi supporting manufacturer Goodluck to develop a mould for PQR for separate consideration. The said mould will kept and used by ABC for manufacture of components for 5 year. In this case, there is no movement of mould. In case of continuous supply of goods , where successive statements of accounts or successive payments are involved - The invoice should be issued before or at the time of issuance of periodical statement or receipt of periodical payment [Section 31(4)]. In case of goods sent or taken on approval for sale or return , are removed before the supply takes place Invoice should be issued before or at the time of supply or 6 months from the date of removal, whichever is earlier [Section 31(7)]. We consider below how the time of supply is determined in each of these situations - A. Time of supply of goods in case of Forward charge, [ Section 12(2) of CGST Act 2017 read with Notification No. 66/2017 Central Tax dated 15 Nov. 2017 ] General Provisions :- According to section 12(2) of CGST Act , Time of supply shall be earliest of following dates: - (a) Date of issue of invoice by the supplier, or Last date on which the supplier is required to issue the invoice as per section 31(1) of CGST Act , or (b) Date of receipt of payment by the supplier, to the extent the payment covers the supply of goods, ( whichever is earlier mentioned below ) Date of entry in the books of accounts, or Credit date in the bank account Registered person - Registered under Regular Scheme other than the registered person making supply of specified actionable claims as defined in clause (102A) of section 2 of the CGST Act, Time of supply shall be earliest of following dates Date of issue of invoice by the supplier, or Last date on which the supplier is required to issue the invoice as per section 31(1) of CGST Act A registered person who opted for the composition levy Section 10 of CGST Act. and the registered person making supply of specified actionable claims as defined in clause (102A) of section 2 of the CGST Act, apply general provision mention in section 12(2) of Section of CGST Act. Time of supply shall be earliest of following dates: - Date of issue of invoice by the supplier, or Last date on which the supplier is required to issue the invoice as per section 31(1) of CGST Act ], or Date of receipt of payment by the supplier, to the extent the payment covers the supply of goods, ( whichever is earlier mentioned below ) Date of entry in the books of accounts, or Credit date in the bank account Significance of to the extent the invoice or payment covers the supply of goods Suppose a part of the consideration is paid in advance or invoice is issued for part-payment, the time of supply will not cover the full supply. The supply is deemed to have been made to the extent it is covered by the invoice or the part advance payment. Time of Supply in case of amount of upto INR 1,000/- received in excess [ In other word Advance Received for the supply of goods u/s 12(2)(a) ] In case of Regular Scheme supplier Where the supplier of taxable goods receives an amount upto INR 1,000/- in excess of amount indicated in the tax invoice, the time of supply of such excess shall at the option of said supplier, be the date of issue of invoice in respect of such excess amount. As per Section 12(2) of CGST Act read with Notification No. 66 / 2017 Central Tax dated 15 Nov. 2017 the said proviso has lost its relevance. In other words, where supplier of goods liable to pay GST under forward charge, if he is receipt advance against supply of goods, there is no need to pay GST on Advance receipt amount. In case of Composition Scheme supplier It is significant to note that the Notification No. 40 / 2017 Central Tax dated 13.10.2017 as superseded vide Notification No. 66 / 2017 Central Tax dated 15 Nov. 2017 Exempt all registered person excluded the registered person who opt for the composition levy section 10 of the CGST Act from the requirement of payment of tax at the time of receipt of advance in case of supply of goods and provides payment of tax in such case at the time of supply as u/s 12(2)(a). Exception provided in the notification no. 66/2023 - following registered person required to pay tax at the time of receipt of advance in case of supply of goods under section 12(2)(a) the registered person who opt for the composition levy section 10 of the CGST Act the registered person making supply of specified actionable claims as defined in clause (102A) of section 2 of the said Act. [ w.e.f. 01.10.2023 Notification 50/2023 ] Rate of Tax or nature of supply is not determinable As per proviso of rule 50 of the CGST Rules, where at the time of receipt of advance (i) Rate of tax is not determinable, tax shall be paid at the rate of 18% or (ii) Nature of supply is not determinable, the same shall be treated as inter-state supply Case Law Payment of GST on receipt of Advance towards supply of Goods ( 2023 (5) TMI 964 IN RE: M/S. PES ENGINEERS PRIVATE LIMITED HYDERABAD ) Issue : Whether the applicant is required to pay GST on initial advance of 5% and interim advance of 7.5% on Ex works value of goods supplied under First Contract Agreement Decision: it was held that the applicant is eligible for the benefit of Notification No. 66/2017 Central Tax, dated 15th November, 2017 and accordingly the tax liability on sale of goods, will arise as specified in clause (a) of sub-section (2) of section 12 of the said Act i.e. at the time of supply , which is the date of issue of invoice by the taxpayer or the last date on which he is required, under section 31, to issue the invoice with respect to the supply. Examples: - Example 1. XYZ Pvt. Ltd. Supplies taxable goods to Suraj Pvt. Ltd. For ₹ 2,50,000/- on 23 Jun and issues the invoice on 25 th Jun. Payment for the goods is made by Surej Pvt. Lt.d on 15 th July. In this case - As per term Sec. 12(2) of CGST Act read with Notification No. 66/2017 Central Tax dated 15 Nov. 2017 Time of supply earliest of the following date Date of issue of invoice 25 th Jun Last date of issue of invoice as per sec.31(1) 23 rd Jun ( movement of goods involve ) Therefore, time of supply of goods 23 rd Jun. Example 2 . XYZ Pvt. Ltd. has entered in to contract with CGL Pvt. Ltd. To supply of gas by pipeline to CGL Pvt. Ltd. For the period of one year. As per terms of contract a) CGL ltd. Shall make payment 7 th of the next month. b) Every Quarter, Trusty Ltd. Shall issue a statement of account showing Qty. and value of goods dispatched, payment received and payment due. The details of the various events are August 3, September 3, October 10 Payment of ₹ 2 lakhs made in each month for the quarter July to September. October 6 Statement of account for the quarter July to September issued by the supplier showing amount of ₹ 2,56,000/- as unpaid October 17 Balance payment of ₹ 56,000/- received by supplier for the quarter July - September In this Case - As per term 12(2), Time of supply shall be earliest of following dates Date of issue of invoice by the supplier, or Last date on which the supplier is required to issue the invoice [as per sec. 31(4)] In case of continuous supply invoice should be issued before or at the time of issuance of periodical statement or receipt of periodical payment. Payment received before issued of periodical statement of ₹ 2 lakh each on or before August 3 and September 3, when monthly payment is issued of ₹ 2 lakh are received. Invoice should also be issued for differential payment of ₹ 2,56,000/- on or before October 6, when statement of account is issued. Example 3. Investigation shows that 150 cartons of goods were dispatched on 22 nd July but no invoice was raised and the transaction dispatched of goods was not entered in the accounts. There was no evidence of receipt of payment. In this case - As per term 12(2), Time of supply shall be earliest of following dates Date of issue of invoice by the supplier, or Last date on which the supplier is required to issue the invoice The invoice has not been the time of supply for the purpose of payment will be the last date on which the invoice is required to be issued. The invoice for supply of goods must be issued on or before the dispatch of goods i.e. 22 nd July. Therefore, the time of supply for the purpose of payment of tax for the goods will be 22 nd July when the invoice should have been issued. Example 4 - XYZ Pvt. Ltd. Supplies taxable goods to Suraj Pvt. Ltd. For ₹ 2,50,000/- on 23 Jun and issues the invoice on 25 th Jun. Payment for the goods is made by Surej Pvt. Ltd. on 15 th Jun. As per Sec. 12(2) of CGST Act read with Notification No. 66 / 2017 Central Tax dated 15 Nov. 2017 Time of supply earliest of the following date Date of issue of invoice 25 th Jun Last date of issue of invoice as per sec.31(1) 23 rd Jun ( movement of goods involve ) Date of receipt of Payment 15 th Jun Therefore, time of supply of goods 15 th Jun.